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Connecting a Sustainable Society and the Times

Material Issue ❷ Connecting a Sustainable Society and the Times

Material Issue ❷
Connecting a Sustainable Society and the Times

三越伊勢丹HD 総務統括部グループ総務部

三越伊勢丹HD 総務統括部グループ総務部

三越伊勢丹HD 総務統括部グループ総務部

Information Disclosure According to the TCFD Recommendations

Introduction

  • The Isetan Mitsukoshi Group has made combating climate change a top priority in its business activities.
    In FY2018, we identified the following material issues to contribute to achieving a sustainable society through the Group’s businesses: i) connecting people and local communities, ii) connecting a sustainable society and eras, and iii) improving the satisfaction of employees. The Group has been working to promote sustainable business, including addressing climate change.
    In FY2018, we set our Medium-Term Environmental Targets for 2030 — to reduce CO2 emissions by 42% from FY2013 levels by 2030. In FY2019, we decided to aim for reducing CO2 emissions to virtually zero by FY2050, and developed a roadmap to achieve it.
    In light of this, we endorse the Task Force on Climate-related Financial Disclosures (TCFD) in November 2021 to promote combating climate change more aggressively. We will continue to review our assessments and analyses based on more quantitative information taking into account environmental changes.

  • TCFD

What is TCFD?

  • The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board (FSB). The TCFD urges companies to disclose climate-related information that impacts their finances in their annual reports.
    The Group will actively work to fulfill its role as a member of the community as well as to improve its resilience by identifying, assessing, and responding to risks and opportunities related to climate change that face the Group.

  • What is TCFD?

Governance

The Group, who takes problems related to climate change as one of our material issues, has established a risk management system to take measures to prevent risks surrounding companies and respond quickly when a risk manifests like other risks, which is headed by Chief Risk Officer (CRO).
Serving as an advisor to the Chief Executive Officer (CEO), the CRO assesses and manages climate-related risks and opportunities, and has the highest responsibility in regard to corporate risks such as climate-related problems. The CRO is responsible for explaining to the Board of Directors and undertakes reporting and monitoring. The Board of Directors receives reports of discussed and resolved matters, and then discusses and oversees action policies and plans, among others.

Strategy

The Isetan Mitsukoshi Group has developed two visions of the future, and analyzed scenarios to respond appropriately to either one.
Both scenarios are based on the scenarios announced by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC).

Specifically, the scenarios present a “4 degrees warming world,” in which we continue on our current path and climate change measures do not progress as expected, and a “less than 2 degrees warming world,” in which climate change measures move forward and the Paris Agreement goals are achieved. We will identify how each one will affect the Group financially and take appropriate measures considering risks and opportunities.

Scenarios referred:

Representative Concentration Pathway 8.5/2.6˚C to 4.8˚C IPCC 2015
Stated Policies Scenario WEO
Reference Technology Scenario IEA
Sustainable Development Scenario WEO
Beyond 2℃ Scenario IEA
Representative Concentration Pathway 2.6/0.3 to 1.7˚C IPCC 2014
World Energy Outlook IEA

“Recommendations on Flood Control Planning in Light of Climate Change,” Ministry of Land, Infrastructure, Transport and Tourism

Less Than 2 Degrees Warming World — Decarbonization Advances and Natural Disasters Stop Intensifying

Less Than 2 Degrees Warming World

4 Degrees Warming World — The World Continues on Its Current Path and Natural Disasters Intensify

4 Degrees Warming World
4 Degrees Warming World

Risk management

The Isetan Mitsukoshi Group assesses, analyzes, and responds to both climate-related risks (physical and transition risks) and opportunities in accordance with the processes described below.
The Group’s Sustainability Promotion Committee also deliberates on risks and opportunities related to climate change and shares the results with each Group company and department.

1. Identify risks and opportunities related to climate change that could impact the Group

2. Plot the identified risks and opportunities on two axes: the impact on stakeholders such as customers, business partners, local communities, and investors, and the likelihood of the risk or opportunity occurring

3. Consider the impact of each plotted item from both quantitative and qualitative perspectives to determine the importance

Initiatives to address risks

The Group has set targets to contribute to realizing a decarbonized and sustainable society, and is moving forward with initiatives to achieve them.

Specific initiatives

◆ Converting lighting to LED

◆ Creating environmentally friendly stores

◆ Greening roofs and maintaining the environmental performance of buildings

Indicators and targets

  • ◆ Medium-Term Environmental Targets: Reduce greenhouse gas emissions 50% by 2030 compared to FY2013

    ◆ Long-Term Environmental Targets: Reduce greenhouse gas emissions to virtually zero by 2050

    ◆ We will deliberate on and carry out actions to achieve the Long-Term Environmental Targets, such as plans to switch to renewable energy, assessments of business partners, and acquisition of SBT (Science-Based Targets) certification.

  • Indicators and targets

Initiatives leveraging opportunities

In line with the Group’s material issues of “Connecting People and Local Communities” and “Connecting a Sustainable Society and Eras,” we will proactively offer environmentally friendly products and services in response to the public’s rising awareness on environmental issues such as climate change.

Specific initiatives
  • ◆ Living up to our “think good” slogan through our main business activities

    think good
  • ◆ i’m green purchase and collection help desk

    i'm green
  • ◆ Recycling with the supply chain run by JEPLAN(Japan Environment Planning Inc)

    Recycling with the supply chain run by JEPLAN(Japan Environment Planning Inc)
  •  
三越伊勢丹HD 総務統括部グループ総務部

Greenhouse Gas Reduction Initiatives

Switching to LED

In 2011, we set the goal of switching all ceiling lights in stores to LED. By FY2020 we invested around 8.7 billion yen and converted around 510,000 lights to LED. Specifically, we replaced fluorescent, HID (high-intensity discharge lamps such as mercury-vapor lamps), and remaining halogen lamps with LED lamps. This resulted in reducing annual electricity consumption by approximately 40.6% compared to FY2013 and cutting greenhouse gases produced from electricity by 26,290 tons.

Reducing greenhouse gases by renovating external lighting at the Isetan Shinjuku Main Store

In FY2019, repairs began on the exterior of the main building of the Isetan Shinjuku Main Store. On September 25, 2020, we completed all construction work and revamped the design of the external lighting. The new design consumes about half the power of conventional lighting, thereby reducing greenhouse gases. The lights change in line with the time of day and season, creating a charming, fun scene in Shinjuku.

Changes in the number of LED light fixtures and electricity consumption throughout Japan
Changes in the number of LED light fixtures and electricity consumption throughout Japan

Switching backyard lighting to LED at stores in the Tokyo Metropolitan area

  • By FY2019 over 95% of ceiling lights at Group stores were replaced with LED lamps, and in FY2020, we started switching back-office lighting with LED lamps in the Tokyo Metropolitan area stores.

  • Isetan Shinjuku Main StoreIsetan Shinjuku Main Store
三越伊勢丹HD 総務統括部グループ総務部

Supply Chain Management

Working to Realize a Recycling Society

Basic Views

  • The Isetan Mitsukoshi Group Procurement Policy declares that the Group will work to reduce the generation of waste, properly treat waste, and recycle resources across the entire supply chain, with the goal of realizing a sustainable recycling and resource conservation society. One of the specific actions to achieve this is the 4Rs.* We will strive to create a resource recycling process that leverages the Group’s unique capabilities and meets customer needs, through measures such as carrying out proper order and inventory management, offering high-quality product lineups customers can use for years to come, providing after-sales service, and purchasing and collecting second-hand clothing.

  • *4Rs: Refuse, Reduce, Reuse, Recycle

    *4Rs: Refuse, Reduce, Reuse, Recycle

Group resource recycling and 4R efforts:We offer a wide range of options to customers in using/giving away items.

Group resource recycling and 4R efforts:
KUROZOME REWEAR — Clothes reborn by turning them black

As part of its “think good” initiative, the Isetan Mitsukoshi Group promotes 4R activities under the theme “enjoy using and cherishing things for a long time.”
As part of this initiative, in March 2021, a shop named “ReStyle” in Isetan Shinjuku Main Store and Mitsukoshi Isetan Online Store launched a new dyeing black service KUROZOME REWEAR. This service is offered through collaboration with Kyoto Montsuki Co., Ltd., a company which has been dyeing traditional Japanese black crested kimono for over a century. They bring new life to customers’ beloved clothes by re-dyeing them deep black using their unique shinkuro dyeing process.
In line with their philosophy to “achieve a sustainable society by extending the useful lives of cherished clothes,” Kyoto Montsuki uses carefully selected dyes in the dying process, which includes using a dye that has obtained OEKO-TEX® STANDARD 100 Class 2 certification, and also works to develop environmentally friendly processing techniques.
With a cumulative total of more than 330 orders for the dyeing service to date, we are getting a greater response than we first anticipated.
We will continue offering opportunities to enjoy extended life of long cherished clothes and to take an interest in finite resources through KUROZOME REWEAR.

Encouraging the use of reusable bags

  • On July 1, 2020, Group stores in Japan started gradually phasing out in-house manufactured plastic bags in response to the new requirement to charge for plastic bags in accordance with the revision of the Ministerial Orders related to the Act on the Promotion of Sorted Collection and Recycling of Containers and Packaging.
    We have also strengthened efforts to reduce the use of not only plastic bags but also paper bags by asking customers if they have their own shopping bags. Through these activities, we have been striving to habitualize the use of personal reusable plastic bags and make it a part of the standard lifestyle.
    Thanks to customers’ understanding and cooperation, we have greatly reduced plastic bag use. This has contributed to reducing greenhouse gases by approximately 1,005 tons (equivalent to the amount of greenhouse gases absorbed by 400,000 cedar trees)* from July 2020 to the end of March 2021.

    *Calculation based on the Ministry of the Environment’s “Visualization Tool for 3R Initiatives” and the Forest Agency’s “Japanese Cedar Conversion”

  • In addition to recommending the use of reusable bags, we also sell bags available only at our stores that are made from recycled fibers from plastic bottles and other waste. We sold 90,000 bags between July 2020 and March 2021.In addition to recommending the use of reusable bags, we also sell bags available only at our stores that are made from recycled fibers from plastic bottles and other waste. We sold 90,000 bags between July 2020 and March 2021.

Collecting standardized hangers

  • In 1997, the department store and apparel industries implemented a “standardized department store hanger” initiative to reduce hanger waste. Isetan Mitsukoshi Group is a participant in the initiative. In FY2020 this led to reducing approximately 23 tons of plastic trash — equivalent to approximately 59 tons of greenhouse gases (the amount absorbed by 24,521 cedar trees).

  • Collecting standardized hangers

2020 Medium-Term Environmental Target results (waste)

  • The Isetan Mitsukoshi Group has continuously carried out efforts to reduce the amount of waste it generates. The 2020 Medium-Term Environmental Target was to achieve a waste recycling rate of 75% by FY2020. In the Tokyo Metropolitan area, we attained 76.8%, but only 71.3% in Japan overall. Today we have waste scales in place at department stores to visualize the amount of waste generated by type. We will continue working to use resources effectively without being wasteful.

  • Waste

    Waste

i'm green

In order to create a society that does not throw things away or produce more than is needed, Isetan Mitsukoshi Group launched a new business in October 2020 called “i’m green.” The business consists of sending things that have outlived their use to places where they can be brought to new use in the future. Items can be brought to our Shinjuku and Nihombashi stores, and we also provide a home pickup service.

i'm green
三越伊勢丹HD 総務統括部グループ総務部

Responsible Procurement

In order to address social issues such as the “sustainability of the supply chain” and “business and human rights, in FY2018 we formulated the Isetan Mitsukoshi Group Procurement Policy and Isetan Mitsukoshi Group Human Rights Policy. Both are available on our website.

Business partner survey (July 2021)

As our first step on our path to realize responsible procurement by identifying issues and eliminating risks on the supply chain for the Group and our business partners, and addressing problems that cannot be solved by an individual company, we distributed questionnaires on sustainable procurement to business partners that account for the top 70% of our department store business sales and major business partners of other businesses and back-office divisions.
The questions were about whether the companies have policies and guidelines in place with regard to compliance, quality control, sustainability, and the environment, and about measures to improve the effectiveness of such policies/guidelines including across their supply chain. We also asked partners about matters such as their awareness of our “think good” initiative and COVID-19 prevention measures, and other needs they may have.

Overview of survey results
  • 292 companies/groups responded (51% response rate).

    According to the survey, the efforts companies showed most active involvement in was quality control. In response to the question on quality control organizations and their operation, many companies indicated they had specialized organizations. We will continue improving the accuracy of quality control to provide safe and reliable products with our partners.
    However, in regard to environmental management (biodiversity conservation, water resources, and disclosure of environmental data) and human rights management (e.g., employment, unfair labor practices, and occupational safety and health) across the entire supply chain, the survey revealed that many companies are aware of circumstances internally but have great difficulty researching their suppliers.
    Awareness of Group measures to prevent the spread of COVID-19 was 80%. We found that understanding has progressed thanks to conveying policies such as rules on coming to work and asking multiple times for cooperation.

  • Overview of survey results
Next steps

Having instilled awareness internally, we will communicate with our business partners and conduct surveys tailored to the characteristics of the industry to ascertain their circumstances, and make improvements accordingly. Industry-wide initiatives to address environmental and human rights problems are needed, so we are also appealing to and collaborating with government agencies and trade associations, and examining human rights due diligence.

We provided an e-learning program on procurement policy to employees of Stage B status (i.e., section manager, sub-section manager) and above (a total of approx. 3,600 employees) in domestic Group companies, in our efforts to instill a corporate culture of awareness and compliance.
Main contents
◆ The meaning of responsible procurement
◆ Objective and details of Isetan Mitsukoshi Group Procurement Policy measures
◆ Case studies

Communication with business partners
Communication with business partners
三越伊勢丹HD 総務統括部グループ総務部

Quality Control Initiatives

Committed to always offering products that are safe and reliable, the Isetan Mitsukoshi Group has been working to ensure quality throughout its long history.
Guaranteeing product quality and safety and accurate labeling is consistently one of the top customer requests in questionnaires, but we have also earned high acclaim among many customers in this regard.
Department stores carry a wide variety of products, but there are not always laws for all of them. We believe that the role of quality control is to create a foundation so customers can shop without anxiety by not only complying with laws, but also creating and adhering to our own standards and rules for products that are not regulated by law to ensure the quality of products.
Besides establishing standards and rules, we also carry out independent inspections to ensure that they are followed, use a variety of tools to educate employees, and collaborate with business partners to continue improving quality control.
One of the Group’s key policies is “The Isetan Mitsukoshi Procurement Policy.” This policy includes guidelines on quality control, but we have also established separate more specific quality control principles to ensure quality control is part of day-to-day business operations.
In addition to following our Procurement Policy, we will also align our actions with the Basic Policy on Sustainability, which encompasses the Procurement Policy, to contribute to the betterment of society.

Quality control principles

Products and services are becoming increasingly diverse in line with customer needs. Always placing top priority on safety and reliability, the Isetan Mitsukoshi Group will pursue quality to ensure customers remain satisfied and live up to the trust they place in us.

◆ We will comply with relevant laws and create our own standards and rules needed for providing quality that satisfies customers, and instill them in all corporate insiders and business partners.

◆ In order to provide safe and reliable products to customers, all Group employees will work together to inspect product labels, appearance, cleanliness, and more.

◆ We will establish and maintain an inspection system needed for quality control.

◆ We will provide total support in terms of quality control, which includes consideration of the environment and resources, and proper product procurement.

Establishment of quality control standards and rules

In addition to complying with laws, the Group has also established its own quality control standards and rules to ensure that customers receive safe and reliable products. These standards and rules vary by scope and detail depending on the product category, such as food and restaurants, cosmetics, jewelry, and clothing, to ensure that customer expectations are met.
For many of the standards and rules on quality, collaboration with business partners is essential. Sales floor staff, business partners, and quality control personnel engage in day-to-day efforts as a team to ensure the standards and rules are followed properly so that customers receive safe and reliable products.

The Isetan Mitsukoshi Group Plans for food sanitation control
— Activity for food sanitation promotion incorporating the idea of HACCP* —

We have drawn up our plan for sanitation control based on the HACCP concept which has become mandatory since June 2021. Our sanitation control plan can be used as a comprehensive guidebook for employees in charge of food and restaurants to ensure food safety, as it includes the Group’s own rules on food handling standards, delivery services, and other matters, in addition to basic concepts. We also made the sanitation control plan easier to use by compiling it into an app that can be used on business smartphones so employees can access the plan anytime and anywhere.

*HACCP stands for Hazard Analysis and Critical Control Point, an international standard for food sanitation management systems.

Isetan Mitsukoshi Group Allergy Information Manual

Food allergies are prior matter as they might lead to life-threatening incidents.
The manual covers the Group’s rules on allergies to provide accurate allergy information, so that customers can buy and eat our food without worrying.

Isetan Mitsukoshi Group Quality Control Standards

We have established standards on quality, functionality, and inspections for key clothing, fashion accessory, and home accessory items, which we use to check product quality in collaboration with our business partners. These standards serve as our main authority on quality, especially for products that are not regulated by law.

Product inspections at department stores

Products are inspected on department store sales floors on a routine basis, but independent inspections to prevent priority risks are also an important part of the company’s lines of defense. We conduct two types of independent inspections — “allergy information reinforcement month” and “food poisoning prevention inspections” — as well as routine inspections to ensure the safety of products. All are carried out mainly by store staff and contribute greatly to ensuring product safety.

Sales floor product inspections (routine inspections)

Every product displayed in every sales area of every store is inspected in accordance with yearly and monthly themes announced by Quality Control. If a problem is found, it is quickly resolved, but if a major problem is discovered that could affect all stores across the country, Quality Control acts as a hub and shares the information with all stores to prevent a company-wide incident.
The inspections also have a synergy effect of improving the skills of stylists so they can gain knowledge on products and quality in the course of the inspection.

Allergy information reinforcement month (independent inspection)
  • Independent inspections are carried out twice a year to ensure that a system is in place to enable accurate allergy information to be provided to customers, which includes checking that all shops keep allergy record books and that the information in allergy record books and in-store POP materials match. Staff departments (such as General Affairs) carry out inspections from a third-party perspective that differs from that of food and restaurant employees to discover problems efficiently. If a problem is found, it is corrected without delay to prevent allergy accidents.

  • Allergy information reinforcement month inspection flow

    Allergy information reinforcement month inspection flow
Food poisoning prevention inspection (independent inspection)

We verify that laws are being complied with and mitigate the risk of food poisoning by carrying out inspections to check that records based on the HACCP concept (such as health management and temperature control records) are being kept properly and that the plan for sanitation control that forms the bases of prevention is maintained. In addition to this biannual independent inspection, day-to-day food sanitation control is an important theme for us.

Food Poisoning Prevention inspection flow

Food Poisoning Prevention inspection flow

Chemical management

Every Isetan Mitsukoshi Group department store checks and manages chemical substances in accordance with the Isetan Mitsukoshi Group Quality Control Standards to ensure that products and in-store environments are safe and worry-free. Chemical management efforts are also aligned with part “7. Eliminating chemical substances” of the Procurement Policy.

(1) Formaldehyde

Formaldehyde is a chemical substance regulated by the Act on Control of Household Products Containing Harmful Substances. Managing it is crucial, particularly in the baby goods department. The Group ensures that baby products are safe from harmful substances by properly managing products, sales, and the environment.
1) We inspect every item and every color of baby textile products (which are regulated by law) that are directly imported by the Group and from private brands for formaldehyde, and confirm that it is below regulatory levels.
2) We voluntarily carry out random inspections with business partners to confirm “formaldehyde inspection certificates” of around 50 baby textile products sold in baby goods departments per year to confirm that proper product management systems are being continuously maintained.
3) Shelves and fixtures used in baby goods departments are inspected for formaldehyde once per year in accordance with an internal manual to ensure that an environment that does not contaminate baby products with formaldehyde is maintained and managed.

(2) Azo dyes that easily produce specific aromatic amines

In addition to products that fall under regulations for “azo dyes that easily produce specific aromatic amines” regulated by the Act on Control of Household Products Containing Harmful Substances, the Isetan Mitsukoshi Group Quality Control Standards specify additional products such as traditional Japanese clothing and futons. In line with these standards, since April 2016 we have asked all business partners except for food companies to submit a “Harmful Substance Non-Use Declaration” when we start doing business with them (if they do not carry applicable products, we ask them to submit a “Certificate on Carrying Applicable Products”).

Educating employees to provide knowledge on quality control

  • Knowledge about product quality control is crucial both for stylists to explain necessary product information to customers and to ensure customer satisfaction and peace of mind. While educating sales floor staff is of course important, with the increase in educational needs from departments in charge of new businesses such ISETAN MiRROR and Furusato Nozei, a broader approach is required.
    For some time we have been holding many seminars on quality control to meet the needs of different departments, but due in part to the COVID-19 pandemic, we have been gradually implementing digital transformation measures, such as holding seminars online and creating short videos on very specific themes, to provide an environment where sales floor staff can have more convenient learning opportunities. And twice per year, we hold a correspondence course for all Group department stores that incorporates timely topics and questions created by Quality Control members. It has been offered for over 15 years now, and today it is a fundamental part of our training program. In FY2020, a total of over 9,000 people participated in the course.
    By integrating and consolidating Quality Control’s many educational tools, such as correspondence courses and videos, into the Group-wide e-learning system, which the Human Resources Management Department started in FY2021, we have created an environment where employees can learn independently at any time. Going forward, we will listen to the needs of sales floor staff and actively work to develop an environment where our employees can gain the knowledge on quality control they need anytime.

  • Group-wide e-learning system screenGroup-wide e-learning system screen
三越伊勢丹HD 総務統括部グループ総務部